I cover technology, entrepreneurs, billionaires and VC's for Forbes. When I get the chance I write about lifestyle and booze too. Previously I edited Forbes's front-of-the-book section "Leaderboard," and was a proud member of the Forbes 400 Wealth Team. Before that I worked on Wall Street. Feel free to follow me on Twitter: stevenbertoni and subscribe to me on Facebook.

This story appears on the cover of the August 20th issue of Forbes magazine.

Instagram CEO Kevin Systrom (Christian Peacock for FORBES)

Kevin Systrom was working behind a hissing espresso machine at Palo Alto’s Caffé del Doge in the spring of 2006 when FacebookFacebook Chief Mark Zuckerberg approached the counter with a puzzled look on his face. The previous summer Zuck had taken Systrom to dinner at Zao Noodle Bar on University Avenue and asked him to ditch his senior year at Stanford to develop a photo service for his nascent social network, The Facebook. Systrom turned down the offer. Now Facebook was worth $500 million—en route to a valuation more than 100 times greater—and making hundreds of headlines. Systrom was making cappuccinos.

“I had been like, ‘No, I don’t want to work at this thing,’ and here I am working at a cafe,’” Systrom, 28, tells me over our $4.50 cups of artisan coffee in the warehouselike room of Sightglass Coffee in San Francisco’s SoMa district. In opting to stay at Stanford he turned down what surely would have amounted to tens of millions in Facebook ­options. “Working at a startup to make a lot of money was never a thing, and that’s why I decided to just finish up school. That was way more important for me,” shrugs Systrom. “I’m sure in retrospect it would have been a nice deal, but it’s funny where you end up.”

In Systrom’s case, the place you end up is exactly the place you turned down—Facebook. But thanks to his Stanford detour, instead of eight figures, Systrom, by doing it his own way—developing the white-hot photo network Instagram, which Zuckerberg agreed to buy in April—stands atop a $1 billion score. The purchase price, which makes Systrom’s stake of 40% or so worth $400 million, is all the more shocking given that his startup has zero revenues and no revenue model. Instagram, just 22 months old, still has all of 14 employees.

But what Systrom also has—and which Facebook, now reeling after a choppy public debut, desperately needs—is buzz and a mobile platform that has prompted more than 85 million users to share 4 billion photos, with six new members joining every second.

“This is the first thing I’ve seen that feels like it’s truly native to mobile,” says Matt Cohler, the former VP of product management at Facebook and current general partner with Instagram investor Benchmark Capital. “To have scaled the product, the network of users and the infrastructure behind it is nothing short of extraordinary under any circumstance; to do it with such a small team is unique in the annals of technology.”

While the Web-based biggies try to jam their products into mobile apps like an overstuffed suitcase into an overhead bin, Instagram’s photo network was jet-set from the start: fast, stylish and elegant. With a few simple thumb taps you can snap, edit (with awesome filters) and share an Instagram photo with the world. A few more taps let you do all the things that built Facebook, including comments and likes. “You can look at Facebook as this bundle of so many different things, but it turns out that people just like photos more than anything else,” says Adam D’Angelo, the former Facebook CTO and current head of question site Quora (as well as an Instagram investor). “So if you specialize in photos and do photos really well, that’s in some way more powerful than this bundle of everything else.”

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I hope the FTC/SEC blocks Facebook from buying one of its strongest competitors — Instagram. Instagram is a photo based social network that now has 100,000,000 users. its one of the strongest competitors facebook has seen to date. Facebook has network effects. Without network effects Mark and Co. would have had strong competition a long time ago. Instagram is one of the few companies that found a hole in Facebook’s armour through its early jump on mobile platforms. It would be a shame to simply watch Facebook buy away the competition. Do the right thing FTC/SEC and block the buyout. Make Facebook compete.

All it takes is a leader to organise a place to go to and if they are cool enough, which is actually quite easy, the rest will follow- and Amazon has learned a lot from failing to do what they advertised they would do for anyone who needed them and found them.

This article discloses the knowledge was commonly taught- a introductory photography class, and it was applied to be discoverable without having to register or care that learning was occuring- people saw photo’s and simultaneously got guidance about how to make there own look like what they saw.

Then it would not surprise me if this company hired people to get ‘leaders’ to shreak oh now it’s going to be Facebook- like you note Mr. Anderson. AND TO SAY “we are leaving!”

journalist ate it up, most cared not at all.

they saw the photo’s, wanted to make some themselves

none of the filters where hard to find, lots of companies can sell them given a marketplace to do so

right now for example my android no longer takes movies- some app has broken the os in that regard- stills fine, but movies seem to be recording, but subtly they don’t- the color does not change,it only beeps to say it’s recording. I know I can fix this in ten minutes or so- but have little motivation to do so yet. At some point I’ll download another movie making app and let it fix the problem or reset the entire thing and expectthe google store to treat it as a new handset and restore all my apps.

It’s about virtualising effort- abouto actually caring about the task that matters not making money, or manipulating others.

you have to spell it out

so that leaves one obvious angle? Limited markup of cost- the Costco promise- you calculate what this costs to do- fifty cents a month? A dollar? For nearly all a dime? Twenty bucks for a lifetime, if paid in the first year, less the half buck already paid, two bits, or dime?

And the value added? NO paid content to you, ever. Your salary, reasonable, part of the dime, or $20 for life fee.

Then you walk it to angels.. to angels who want to enjoy filters, without ads, themselves, like that ceo who hired people to pay signup costs and get signatures for google fiber in this millenium’s wonderland across two states?

YOu say- can I borrow whatever times whatever you expect to be your penetration, or whatever our penetration costs to calculate with precision very large mature industries are a Bing away from reach, and you hand them a business card they can hand to someone to loan you that- if you want to be flash you put your own money in the account- like some street musicians guitar case’s first dollars, to get this going on spec- and your done.

It’s not hard.

but if you want themoney those who get it say they don’t even want- this does not work

it’s about getting paid for the time you put in

creating a marketplace for filters, and a place to use them and share there results

for money!

those using it’s money!

not there time and impressionability

not there gullibility and rank exploitation- to at there consent to be used.

But with one simple message.

YOur money is good with us. Even just $20 for the rest of your life. Or that dime- nothing is free, but this, superior to anything facebook can afford to finance for you for ‘free’, this you can afford, without swallowing any pride, but rather with- you guessed it, pride

Call it NOTPRIDEOPTIONAL as it’s code name, and something evne more obvious for us when amazon says there ready to rock.

And of course- you have created a brand- succeeded where cnn failed- failed because there legac yof advertisers needing to be pleased- becausethey aer not free.

They have no liberty.

They are not owned by any ZMAN but owned, owned just the same.

And your not. Your free to sell freedom instead.

Not offer indenturedom for a stick of gum

this brand- you pay, we deliver, and everyone can afford us, because we do it better then snobs can afford, does not soon leave you with nothing to do- eventually search itself is yours to charge cost plus whatever percent your market research says is most appealing for you to be paid. You don’t actually care at all. You want search. Because you know we don’t have it now- that google shopping is it’s opposite, and that what little boys conspire over beer’s to do can only take us so far when a mere billion is enough to get them to stop and start over from scratch with the caveat that they have no chance whatsover of being so lucky again. None.

Your selling something though- luck has nothing to do with it. Good luck!

So Instagram is a $1B company? But there’s no revenue, no revenue model, 14 employees. I call that a fun idea turned into a fun but useless service that no one will pay to use. A company that generates $1B in revenue is a $1B company. This company is worthless. Sure, the idea, the technology, the implementation are all very nice and people just love to use it this year. So what?

Zuck — that genius whose own company is wallowing — pays a bil for it. So what??

Instagram. The name is worth more than the business. I give it a year. Look at it this way — the purchase probably brought FB that much closer to the deadpool.

Hello HeadHoncho, Yes, there is no revenue but they haven’t even tried to make any money yet. I disagree that it is useless. And since it’s visual and mobile I think companies will pay millions to advertise on it. “I give it a year”– how much you want to wager?

Yes companies might pay millions to advertise, but i don’t think ad revenue is expandable or even that sustainable, it just seems like everyone freaks out over the “potential energy” these companies have but not their “kinetic energy”, cause in physics those are equal but here it seems like a lot of over speculation as to the worth of some of these companies. Don’t forget, if you’re income is based on ads you’re at the mercy of the companies who make real sustainable revenue, and the second they find a better outlet you’re screwed. I think ads are an excuse to invest in and start all these software companies.